Should I Tell My Creditors I’m Planning on Filing Bankruptcy?

This is a personal decision and will depend on your comfort level and how quickly you plan on filing for bankruptcy.

There is no predicting what a creditor’s action will be when you notify them of your intentions of filing.  They may try to work with you to create a different pay schedule or even offer a settlement. However, beware – forgiven debt is considered income and you will receive a 1099 that will need to be claimed on your taxes.  Worst case scenario, they send your account to their lawyer to begin legal proceedings. If you plan on filing bankruptcy soon then that will not be a problem.

If you are going to tell a creditor you are filing, please make sure you do plan to file.  Also, do not give out attorney information unless you are absolutely positive you are filing and will be using that attorney.  Once you provide an attorney’s name to a creditor they will usually stop contacting you; once you actually file the bankruptcy they are required to stop contacting you due to the automatic stay that goes into affect.  If you are still interested in a settlement, be sure to check with your attorney and see if they will plan to participate in negotiating a settlement.

Typically, we encourage people to tell creditors they are filing bankruptcy if they are expecting to file the bankruptcy within 60 days. This will help stop the creditor phone calls and harassment.